Company Interview / BHP wired for growth amid copper charge

Key points:

Copper now exceeds 50% of BHP’s EBITDA, with significant growth plans in Argentina, Chile, and South AustraliaOperational excellence enables cost reductions and robust dividends, with an interim payout of US$0.73 per shareStrategic funding, including a Wheaton Precious Metals deal, unlocks capital for copper growth projectsBHP maintains discipline on acquisitions, prioritising organic growth in copper and potash

BHP (ASX:BHP) delivers robust operational and financial results, with Vandita Pant highlighting a strong performance across key metrics. Production is up by 2%, while unit costs fall 4.5% despite inflationary and currency pressures. More than half of BHP’s EBITDA is now derived from copper, marking a significant milestone for the company. Pant emphasises record shipments and production at BHP’s Vale operations, strengthening its position as the world’s lowest cost iron ore producer. Notably, the Escondida copper mine in Chile sees increased production guidance, supported by solid prices, and assets in South Australia and Argentina continue to mature.

Copper growth is a core focus, with Pant noting a 30% copper portfolio increase in four years and expectations for a further 40% increase by the mid-2030s. BHP’s Vicuna project in Argentina stands out as a future top-five copper, gold, and silver basin. The expansion in South Australia will double output, including gold, silver, and uranium by-products, leveraging favourable market conditions. Investment in Escondida and the Resolution project in the US reflects BHP’s vision to reach 2.5 million tonnes of copper equivalent by the mid-2030s.

Funding copper growth is supported by strong operational cash flow and strategic agreements, such as cash unlocked through future silver production with Wheaton Precious Metals (NYSE:WPM). Iron ore remains resilient, though BHP sees Chinese demand plateauing. Pant underlines disciplined cost management in the face of a stronger Australian dollar, reaffirming BHP’s track record as the lowest cost producer.